Return-to-office mandates boost company profits? Nope Research has shed light on the profitability gains that the biggest US corporations experienced after issuing return to office mandates: There weren't any, and the policy made their staff unhappier. Among the S&P 500 stock market index, some 137 businesses told their hired hands to haul their asses back on site last year, and …
Return to Office was never about boosting company profits.
Return to Office was always about the justification of the role of middle management. They have to be seen to be doing something under the pretense of productivity. When we worked from home they couldn't do that, and that in turn made them worry about their own job security. Which isn't their job to worry about, they want the workers to worry about that.
A worried worker is a productive worker isn't it? Well, that's the mantra of the (many) managers I had the misfortune of working under.
... cannot justify your role, because you don't, well, manage, then we can get rid of you. And should.
I'm a team lead and process manager. If I don't lead the team and manage the process I should do something else. Simples. Take a new job or a different (more suitable) role in the company.
The management layer above me exist to shield me from crap coming from above. And to shield the above from some of the crap we do. They are necessary, and I do not want their job (and fortunately, so far they work as intended, and don't interfere with my daily work as long as progress is visible).
The management layer above me exist to shield me from crap coming from above.
So basically the whole management pyramid is some sort of umbrella to protect the workers from the shit falling from upper management? Great, just fire the whole pyramid and let workers work.
(I'm a freelance, so I take the shit in my face anyway)
Sadly the umbrella is required in my experience. The crap will fall, no matter what. From shareholders, from customers, from suppliers, from government, from lawyers, from the need to make really significant decisions occasionally, from unions. We need people higher up to deal with all the big crap and pass it down as smaller crap that can eventually be dealt with by people who also need to get some proper work done.
Ideally those layers are not too high and the people are both clever and understanding, as well as trusting their employees, to enable the maximum work to be done but sadly that's rarely the case.
Agreed. There are many sources of shit, and most of them are not under the organization's control. Some are, of course, but often the worst offenders are at the very top of the pyramid, and good luck replacing those with something better. (And no, I don't think you're going to have successful firms with no management at all. "I thought we were an autonomous collective!")
No. While certainly middle managers were used as pawns for this, the real reason for return to office is commercial property.
Offices are worthless if people are not coming in. Many institutions hold investments in commercial property and they don't want their portfolio to lose value.
That is why there is the drive to push workers back in.
That's why corporations could never give straight answers why they require workers to come to office if they can work from home just as well. They are being pressurised by shareholders and investors.
I think part of the pressure is living with the consequences of property leases. Property leases tend to be long ie. 10~20 years, expensive, with upwards only price increases, difficult (and expensive) to get out of. So executives are having to live with having to service a large opex cost. Now if you owned your own premises, you can simply dispose of the “asset” and whilst you will have reduced the book value of the business its opex will be reduced and there will be some cash/capital in the bank ; enabling you to undercut those who’s opex is a millstone…
People at the level should have known about sunk cost fallacy. Instead of doubling down and in the long term losing more, they should cut their loses and move on to the new reality.
I think nobody in their right mind goes into 10-20 years lease without having ability to break the lease early without penalty or at insubstantial cost. Corporations too big to fail may be an exception.
I think nobody in their right mind goes into 10-20 years lease without having ability to break the lease early without penalty or at insubstantial cost.
Most leases do have break point every three to five years, but worth noting that in most areas companies want premises, supply has been constrained, and so the customer has only two options - buy or build their own (which involves pricey capital and shareholders hate), or signing on the terms the commercial property owners offer. That's why companies end up with terms like upward only rent reviews.
Not sure if that is the case to today. There is plenty of supply of office space and often at favourable lease terms as landlords struggle to find tenants. There isn't a problem to get a break point as early as 12 months today.
We have too many properties that are focused on bum on seats type of businesses and this is now thing of the past.
I think landlords should either try to convert offices into housing or adapt properties for other uses. For instance people trying to start their own business struggle to find light industrial or workshop space.
Commercial property market needs correction and rebalancing. Forcing people into offices is not the way.
Some of the reagent/chemical deliveries might invite an dawn visit from Mr Plod. :)
Actually just about anything in the bio- and chemical sciences line would violate a slew of regulations before even considering urban planning restrictions.
I imagine a physicist with TeV particle accelerator in the backyard might not be too popular.
"There isn't a problem to get a break point as early as 12 months today."
That will vary depending on tenant improvements and who is paying for them. Some landlords will give a tenant a certain budget to shape a space fit for their needs in exchange for lease terms that pays that cost back plus interest.
"Property leases tend to be long ie. 10~20 years, expensive, with upwards only price increases, difficult (and expensive) to get out of. So executives are having to live with having to service a large opex cost. "
This could go right along with the sunk cost fallacy. An empty office is cheaper to have than one full of people and furniture. It's also easier to sub-lease the space if it's empty. Some contracts don't allow tenants to sub-lease, but will allow a tenant to break a lease if they can find somebody else to rent the space.
That and also the profits of the commercial property owners.
If nobody needs an office to work from then the value of office buildings goes down which is why there was so much propaganda about 'your job might as well be done by someone in India' and other such scaremongering from people in or invested in the commercial office space business.
There is something to be said for "If you can do it at home, why can't someone in India do it?" in many cases. But that often does ignore a lot of issues that make having local workers better than scripted workers in another country with a different culture that customers don't want to deal with.
The difficulties posed by timezones vary widely with the type of work, the individual employees, the team as a whole, and the organization.
I've worked with a team that's primarily in another timezone for decades. Over that period we've been 5, 6, or 7 hours apart. It's occasionally inconvenient but has never been a serious problem. My manager is currently 2 hours away from me; again, it hasn't been a problem.
"There is something to be said for "If you can do it at home, why can't someone in India do it?"
If there is somebody in India that can do the work, they could. A downside I've run into is the business culture in other countries can be very different, the holidays are different and even when somebody in India speaks "English", it's different English than the UK, US or AUS. This always makes for odd documentation. An Indian working for a British company could be required to adhere to the same holidays, but that won't mean that resources they might need locally aren't available as the businesses are shut for something. When I had a manufacturing company and one component we used was sourced in S. Korea, I imported a listing of common Korean holidays for my calendar so I'd know if I shouldn't expect a response to a fax or email for a day or so. If I needed to ring up to discuss something time sensitive, I'd know when I should do that rather than invest all of that money to make the call for naught.
Oh I agree that there are plenty of things that shouldn't be sent to off-shore call centers full of people who don't understand you, you don't understand them, in both language, accent, culture, etc. But that's rarely stopped companies from doing it if they thought it would save a dollar/pound/euro and the customers would only complain enough to reduce revenue by a penny. And there are plenty of jobs where all of that wouldn't matter, or only slightly and could be worked around. Jobs which formerly were thought of as "we need someone here in our office to do it" so the possibility of outsourcing it wasn't considered, but are now seen to be doable remotely. So the issue becomes showing that even though the local workers can do the job remotely, that they still provide sufficient value to the company to keep them on because there is still something that off-shore workers can't provide.
I sat on a management employee committee.
Employees wanted flextime - by 95%
Management could not provide it because it would mean management would "have to monitor everyones productivity and ensure projects were finished on time".
I asked - too politely really - "So what are management doing now ?"
The forum never met again, and the employee benefit was a dress down Friday, but no jeans or T-Shirts.
I often wondered if the people who organise 'own clothes days' really think I'm wearing someone else's clothes the rest of the week/month?
Also, I can't wait for someone to rock up in full gimp suit or fursuit. (I have a feeling it probably wouldn't be an issue where I work)
When I joined $COMPANY it was agreed that any office time would be on the basis of adding value.
A couple of months later this was changed to 2 days a week at one of the company offices (notably my direct team lead does not work at that office - his office is over 200 miles away); the reason was that people in the office I use when required were perhaps a bit jealous. That was recently cut to one day.
Three things are interesting here.
1. As my handle implies, I design electronics (among a number of other things such as low level software and process improvement - by which I mean making it work for engineers), which requires large amounts of peace and quiet for concentration (something not found in an open plan office).and my actual productivity went down. I can access the CAD licence and network from my home office (over a VPN) just as easily as I can in the company office.
2. In general, to talk to the team I work with I use Teams (I know...) even when I am in my local company office except for the occasion I go to that other office for a week.
3. The one day I go in actually does have value (an all site engineering update with the other sites on Teams).
Unsurprisingly, my overall productivity has gone up, I don't have the commute and the company can burnish its green credentials as my vehicle time is reduced (there is no public transport in the village).
I cannot upvote this enough.
My last job had an open plan, but it was in a carpeted area with an acoustic ceiling. I didn't like it, but it was bearable.
We moved. Into the city (from the suburbs...for "image" reasons), into a rehabbed industrial space. High concrete ceilings, bare concrete floor, long tables, you got 5 feet to call your own. The noise level and people passing behind you effectively prevented any concentration. Luckily, I was nearing retirement. Then, COVID happened. I finished off a section of my basement with a raised floor, carpet and an acoustic ceiling. Added a long workspace and network cabling. I spent 3 years down there, after which I returned to the office just long enough to hand in my retirement papers.
I still work down here, but as a contractor, making more per hour, *every* hour, and thoroughly enjoying it.
"I still work down here, but as a contractor, making more per hour, *every* hour, and thoroughly enjoying it."
I'm in the same boat. My home workspace is better equipped and set up to my preferences much better than when I worked at the rocket company (not SpaceX, wankers). I make more per hour and get more done every hour I work from home on electronics things (I do field service stuff too (photos, plans, aerial images). I get my music or not and people aren't walking up demanding I help them do their jobs. I can be virtually present if needed, but I prefer not to install Teams, Zoom or Skype on my computers so it would require getting yet another one just for that sort of time wastery. I can also do whatever work I want without an employer claiming rights to that work because I did it using company resources.
Pretty much this - it's been long known and well studied how open plan offices are bad for work place efficacy and employee morale, however they are constantly used by companies. Which indicates that efficacy is not a key driver in their use. RTO mandates fall into the same category of manglement decision making.
Need to have office space to house the people; we've already paid to lease the office; people need to come into the office to justify the space.
Yes, I've visited some of those, and I'm glad I never had to work in one on a regular basis. Personally I can tolerate a lot of distraction, but that doesn't mean it's fun.
I spent a few years working for a startup that was housed in a moderately-decrepit old four-story office building. There was a set of railroad tracks in regular use on the far side of the (not very large) parking lot — which made it very convenient to take commuter rail into work, but did mean a certain amount of noise. We had occasional issues with the building, such as squirrels in the ceiling and one very memorable roof leak (which mostly ended up being testament to just how much water you could pour over an RS/6000 workstation without ruining it).
But we all had individual offices, with doors you could close, as well as common areas. One developer liked his workspace warmer, so he brought in a little heater; no complaints from management and it didn't bother anyone else. Want some fresh air? Open your window — they all opened, and again, no one else was bothered. Same with the blinds. Arrange your office furniture however you like.
It wasn't pretty, but it was a good space to work in.
My trick to dealing with unwanted external stimulus mostly revolves around the audible side of things, and simply involves sticking in my earbuds and firing up a suitable metal playlist. For the slightly less annoying visual disturbances, I can always just recline in my chair so that my eyeline drops below the top of the monitors that form an ad-hoc divider between my desk and the rest of the office.
But yeah, for those of us who do find it hard to concentrate properly with so much background clutter assaulting your senses, WFH is a complete game changer.
Synchronous communication is a massive contributor to costly mistakes.
Electronics is not something you can just edit the line of code to fix the mistake, recompile and job done.
Someone asks you something while you was in the middle placing crucial component.
You forget that you have not completed the placement.
Prototype goes into production.
(couple of days or weeks wait time)
Prototype has issues you think shouldn't happen.
You go back to review the design and notice the crucial component is placed incorrectly.
You scratch your head.
You are going to correct the mistake, but someone comes up and asks about other component.
You forgot to correct the crucial component's placement.
Prototype goes into production.
(couple of days or weeks wait time)
Prototype has issues you think shouldn't happen.
...
But at least commercial property owners can feel how their properties are filled up and buzzin' and enjoy their portfolio growth.
I'll agree that in general interrupt-driven communication is a fairly serious productivity drag for intellectual work, and for some other types of labor. That's why I have email notifications disabled, for example. I poll my email when I start in the morning, and after that when I have some free time, for example while a test suite is running.
"Prototype has issues you think shouldn't happen."
So if you need to talk with somebody or they need to talk with you, email, DM, etc rather than constant interruptions. At that point, what was the reason again for having everybody in one office? Before the explosion of communication methods, people did need to be in one location and the company needed to be in an office district with other companies in the same line of work and not too far away from the financial district and the ports. These days a person could be based in luna and it would make very little difference.
I'm going to have to read this paper.
It isn't clear to me a priori that using profits or share price as the output indicator (before change compared with after change) is OK. Lets face it we are in a worsening business environment for many sectors so there could be other time based factors coming in. Can it be possible to isolate the change in outputs specifically due to location of employees?
"Can it be possible to isolate the change in outputs specifically due to location of employees?"
I don't think the employers that want people back and firmly shackled to a desk in a downtown high rise will want to look at that. I know some people enjoy busy dense cities, but I am firmly in the other camp. There's no way I could afford to own my own home in most of those places, much less have it paid off. I also don't like an endless parade of people wanting to sell me something going door to door which doesn't happen nearly as often in a small town where the houses can be spaced quite a distance from each other. Not that I answer the door when I'm not expecting somebody.
Being happy where I am and not traveling to a place I don't like is likely to be a factor in my output. Not having to take deep breaths and bring my mood back down to ground level means I can get to being productive much quicker and not start ramping up the "commute home dread" sometime mid-afternoon. Buzzing around town is perfectly fine. I know many of the shop owners/employees, traffic isn't an issue and there's the pleasant chance of running into somebody I know and having a chat, getting a dinner invite, that sort of thing.
The return to office mandates are related to investors panicking their commercial property investments are going to lose value if workers are not coming in.
Simple as that. They pressure the boards, the board pressures managers and managers pressure employees.
All this to make the rich richer.
When next time employer mandates you to come to office ask if they give you share of capital gains on the commercial property you help keep the value of by coming in.
First victims of bad commercial property investment:
https://www.bloomberg.com/news/articles/2024-02-01/big-bet-on-us-property-goes-awry-for-japan-s-aozora
It doesn't take much wit to discover that most commercial property is owned by investment funds, banks, pensions etc. and that a drop in demand due to WFH causes the value of the investment to drop too.
A lot of the propaganda around 'RTO' has been directly linked to people who have lots to lose because of that drop in value.
Would you like to borrow a Crayola to join the dots?
I noticed that spokesman for technology progress, 76 year old , Sir Alan Sugar was complaining recently about the move to working from home (So multiple office owner Alan Sugar, what 1st made you think that people should not work from home?)
The thing that many of the people pushing to a return to offices miss is that rather than some revolution, WFH was just really a natural evolution of work culture. This is evidenced by the fact when lockdown occurred the infrastructure was already there to support it. High speed internet was the norm, and companies had already transitioned to teams and installed VPNs. In fact if lockdown had occurred 5 years earlier, I would of been buggered, but as it was the transition was relatively painless. So I contend that rather than WFH being some sort of sudden break in business convention, Covid only hastened the transfer. If there is a problem it was instead of a slow transition, the move was made fast, and the processes to best support it have not had time to catch up
In fact you only have to look at how the workspace had already changed. Work was being distributed and tools like Skype were replacing face to face meetings. Still today I find myself in the office but in wall to wall meetings, all on teams, where the value of the 1 hour commute is all but lost.
The hold up pre-covid was just the inertia of managers who were afraid that they would lose control over there minions. There was a belief (and still is) that employees not in the office will spend there time watching TV or playing games unless there line manager can overlook them. Strangely enough it was often the same managers who often found excuses to WFH while denying other requests
Also the advantages to companies of WFH are rarely highlighted. I would bet that sick pay has been severely curtailed. Companies have a wider pool of talent they can try and attract.
As someone who is at an age where I still naively think that a mobile phones primary purpose is to make phone calls, I also see that the generation far younger than Sir Alan is much better equipped for the transitory work life. Both my daughter's live in the rectangular confines of there mobile screens, so working in a virtual world is far more natural than for me, and they have the skills to make best use of it
Of course with any change there are issues. I still think there is value in gaining that face to face trust relationship. Saying that I have never met 1/2 my team across the world, so it is not insurmountable. The other problem is that I'm lucky in owning my own house with space for a dedicated office space. My colleague during lockdown was not so lucky and had to share the dining room table. However the future generation are lucky if they can afford a shared flat never mind a house of their own, which means there maybe whole generations where the benefits of a WFH culture will be unavailable
My colleague during lockdown was not so lucky and had to share the dining room table.
I know some companies solved this in a quite elegant way. They let employees rent desk space at their local office hub (company handles membership, employee can use company card to pay for it or they get reimbursed for office costs). So they go to office if they want to, but it's local and for many it's a nice walking distance.
And smart money in property investment would be looking at just such opportunities while converting those city centre dinosaurs to housing. At some point things must rebalance with those who want to live and work in city centres and those who want to live and work outside city centres can all be satisfied.
The French branch of a Swedish $TELCO company was reimbursing IKEA desks and/or office chairs ( from a selection ) or up to 500€ if you didn't want to go IKEA.
It assumed you had the room to install an office somewhere... Most of those that used it found room for it, others just went for an office chair...
Also the advantages to companies of WFH are rarely highlighted. I would bet that sick pay has been severely curtailed.
My employer solved this. No sick time, you have to use PTO. Also, no overtime and no comp time. If there is a production outage or a project gets behind, you're expected to just donate the hours and 'be a team player.'
As someone who is at an age where I still naively think that a mobile phones primary purpose is to make phone calls
Today's smart phones are terrible devices for phone calls. Mostly due to touch screens and no physical buttons. 1/2 my calls on my OnePlus go to voicemail because as soon as you try to swipe to answer, the screen goes black. Of course, since our phone networks are so insecure, nobody actually answers calls from people who aren't in their contact list. I expect voice calls to pretty much die out in a few years.
BTW, if anyone is listening, I don't want to sell you my house for cash. I don't need anyone to give me a low ball offer that you can flip for profit. Stop calling.
"Today's smart phones are terrible devices for phone calls."
My long lost POTS lines were better, but I still use the mobe for voice calls. Text is a time waster for me and I don't live my life looking at the phone and banging off the walls.
Anybody not on my contact list calling from a number I don't recognize is going to enjoy my dulcet tones delivered by my Voice Mail message. If they don't leave a message, they are giving up their chance to get me to renew my auto warranty coverage. I'll also look up the number later and if it's noted as a spammer, it will be blocked and assigned a silent ring tone. A good way for a politician to get me to vote for the other person is to send me a text. I used to have text turned off on the carrier level, but they won't do that anymore. Every once in a while it's handy if somebody needs to send me a lockbox code or some other bit of info that I'd never remember unless I could write it down.
Siralan was on the BBC the other day, complaining about this very issue.
However he didn't travel into the BBC studios to do his interview, but did it remotely via Zoom, from... his home. (Or possibly one of his offices, it wasn't really clear.)
I don't think he's really thought this all through.
It really is Gerald Ratner* level stuff, isn't it? I never understood why Sralan gave money to the Labour Party, if you cut him in half** there would be a Tory rosette down the middle. I suppose it was money to Tony Blair though...
*For those not familiar with Gerald Ratner, he was the owner of a chain of jewellery shops who famously described a set of earrings he sold as, "cheaper than a prawn sandwich from Marks and Spencer’s, but I have to say the sandwich will probably last longer than the earrings," alongside other comments describing some of his wares as "total crap". Needless to say, his business didn't fare too well after that - the share value plummeted by half a billion quid.
**This is not a (tacit) request for someone to do this.
...our findings do not support the argument that managers impose mandates because they believe RTO increases firm values...
So what was their real reason(s)? They don't feel it makes you a better worker.
It has been known for years that WFH makes people more productive, It lowers company costs, electrical bills, rent etc.
It seems to be some sort of race to prove that companies see employee satisfaction as a negative. Does this mean that we don't have it quite so bad on this side of the pond?
I know that a certain Tory knight dislikes it but JRM is surely a self-parody?
"Numerous company top managers argue that working from home reduces the need for top managers.”
Managers are still needed, but if they can't manage people they can't see, that would reveal either that manager isn't necessary or isn't good enough.
Guy Kawasaki wrote that Steve Jobs had a technique of MBWA (Management By Walking Around) and that was after his return and Apple's big growth spurt, but Steve was sort of a dick. Things happened, but plenty of people left and some of those that hung around would have preferred he stayed in his office, in another building. The big boss wandering around looking over people's shoulders and asking them questions doesn't work as a way to encourage productivity.
March 2020, management: You can *only* WFH or the company dies.
This is a classic case of the powers that be being caught in a lie, and using "can't" as a synonym for "won't".
I'm mildly surprised we haven't seen hysterical headlines about "WFH helps terrorists", or "only paedos would WFH"
2 weeks ago CIO at <current client> held a big all-teams, going on about increasing in-office days for that awesome open-office synergy and productivity.
This week some drone promptly came into the office Covid positive and sat in a 2 hour full team meeting. Now it's like the danse macabre or 10 little Indians. Rumour mill still not clear whether they did it knowingly or not.
I wasn't in - I actually have "one day a week" written into my contract, and that only if there's no health scares.
In my experience ghastly for infection control. These mostly unvaccinated young whippersnappers seem to collect an unenviable array of respiratory (and GI) infections which they gleefully share with their work colleagues.
I noticed that during the mandated WFH period the wider availability of video conferencing meant that there was an expectation of "instant on" availability which there wasn't previously when ones office had to be located - situated (in)conveniently located behind the aircon facilities room so scratch the limited of intellect and the congenitally lazy ie ~99%. Fortunately my WFH internet was fast enough for vpn and ssh but not for teams or zoom. (Odd that? What? :)
Offices are expensive. Without even considering rent and leases you have: utilities, you have cleaning, you have security and you have other risks that come with people being in close contact with each other.
Then there is the expansion of the labor pool. You go from the region of the office, to THE ENTIRE WORLD. the challenge goes from finding the right fit from a few candidates to finding the right fit from a lot of candidates. You can hire a person who needs accommodations, without any extra work on your part because they have taken care of that themselves at home.
Then there is the kaisen: fewer steps to the toilet, fewer steps to get water, fewer steps to go to meetings, less production loss from meetings.
It is really telling that management is NOT seeing these benefits.
Peronsally I like going in 2 days a week, my kids have left home and it's just me and the missus at home now so it does us both good to have "5 mins" apart. My company is still WFH, we have 500 employees with one office with 120 hotdesks, and I reckon most days I go in you'll be lucky to get double digit figures for attendance!
As my manager's manager said, "If we have to spy on people or keep tabs on grown adults, then we're failing as managers.".
And that's how it ought to be - employer provides the ability for people to WFO if desired by the employee/required by the nature of the work they're doing that day, but doesn't mandate it for everyone whether they like it or not.
In a mature, adult, sensible workplace where people actually get along and aren't just a bunch of scheming backstabbers out to trample on anyone they can use as a stepping stone to the next rung up the corporate ladder, teams can come to their own consensus over when they might find it beneficial to all get together in the office for a day, and when it makes perfect sense to simply let everyone work however they feel suits them best. Let the project deliverables speak for themselves as to how well people are working, not how many hours each person is clocking in at the office vs at home.
We still have some way to go before this is the norm, but the moves that've been made in the past 4 years are a definite improvement over what was considered entirely reasonable working practices in the decades before that, and are helping workers to gain a better appreciation of just how good or bad their management is. And those of us who thrive under these new conditions would very much like things to keep on moving forwards, not do a screeching u-turn and speed headlong through the oncoming traffic back towards where we came from, no matter the consequences.
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